Good times ahead for Chinese pharmaceutical firms as policy environment turns favourable
Country’s renewed focus on health sector reforms could prove beneficial for sector, say analysts
China’s renewed push to promote health sector reforms and back it with a slew of favourable policies is expected to boost the fortunes of the country’s major pharmaceutical companies that had been languishing due to the tough regulatory environment for the past two years, according to analysts.
“We anticipate a turnaround in health care stock prices this year after their weak performances in 2015 and 2016,” said Sean Wu, an analyst at Morgan Stanley, in a recent research note.
“Policy headwinds temper our enthusiasm, but we think the drug segment pressures are beginning to subside,” said Wu, adding that investors should focus on stocks of companies with strong research and development (R&D) capabilities and rich product pipelines.
An underappreciation of Fosun’s manufacturing assets and the healthy momentum of CSPC’s key products are major assets for the two companies, said Wu.
“Fosun has four drugs with potential annual combined sales of 1billion yuan (US$145.6 million) waiting for tender to gain market access. We expect sales to continue ramping up in 2017,” said Wu.
